The question may have been different but the chanted response was the same. As President Barack Obama gave his message of hope and aspiration to the good people of Ireland last week, so the dons of London Business School (LBS) gathered to preach their own sermon. Can big companies innovate or is such noble activity the preserve of the new and nimble, they asked an audience of largely international company executives. After much soul searching and self doubt, as well as a hearty lunch, the answer was a resounding: "Yes, we can."

George Buckley, chairman and chief executive of US manufacturing giant 3M, was the first of the "big" bosses present to set out his stall. Buckley explained how, in his world, innovation is everything. After all, 3M boasts 55,000 different product lines, from the ubiquitous Post-it note to complex mobile phone screen components.

Buckley's teams routinely "cannibalise" about 30pc of the sales of 3M's existing products in existing markets every year with new versions that will attract the same customers. They also throw "pebbles" into adjacent markets to see what effect the ideas have. This combination of "incremental innovation" with "leapfrog technologies" puts 3M in the right competitive position, Buckley argued. "If you don't work on the leapfrog, whatever that might be, someone else is going to work on it for you," he said.

Fashionable alternative strategies such as outsourcing the generation of ideas and development for core product lines is an "anathema" to Buckley. "Outsourcing is a near guarantee of failure," he asserted, batting away notable exceptions to that personally held rule such as Procter & Gamble's desire to secure 50pc of its future sales growth from product ideas sourced from outside the group.

Winning the innovation game is not all about money, Gary Dushnitsky, an associate professor at LBS, pointed out. He noted that General Motors had invested around $40bn (£24.3bn) in R&D during the 1980s, while the entire US venture capital industry managed just a third of that amount. But GM registered a negative return of 90pc on its efforts while the VCs turned a healthy profit.

It is all about small units of expertise, incentivised in different ways and "cherry picking" the most promising ideas appearing across a range of sectors, Dushnitsky suggested, rather than a behemoth trying to pretend it can use its firepower on its own internal efforts to maintain its edge. He pointed to the success of open-source movement in harnessing peoples' skills in developing new products and services. And he challenged companies to think harder about how they can engage skilled staff better in this process.

3M operates a 15pc rule for its technicians – 15pc of the working week to develop their own products. But Dushnitsky asked why more manufacturing companies do not give their experienced but ageing engineers time to work on pet projects rather than send them out to pasture when they hit retirement age.

The reason for the smaller, entrepreneurial businesses in the room was that most large companies don't get innovation. Geoff Vuleta, chief executive of product development specialist Fahrenheit 212, said that from his experience companies were good at acquiring new product prototypes but bad at working out what they would do when they arrived at the front door. Many just give up. "They are accepting failure far too easily," he said, before adding: "Very few companies have innovation in their DNA."

Excluding his own company from this bleak assessment, 3M's Buckley agreed: "They fear disruption far more than they do destruction. They push the decision to innovate back because things are OK today."

It was a neat phrase that resonated with entrepreneur Michael Hayman, co-founder of Seven Hills, a communications agency. "It was a great point to make but I don't think it flowed through to the way he [Buckley] worked with partners. He was saying they would do it all internally and that's quite defensive. I think there's a more collaborative mood taking hold."

When it comes to the ability to innovate in ways of working as well as product and service development, the big difference, Hayman thinks, between large companies and small entrepreneurial ones is the amount of risk they are prepared to stomach for the reward on the table.

He gives the following example: "I was in a pitch with a member of my team the other day and it was going well. We got to the Q&A. They asked her a direct question and her answer was good, but I thought she could do better so I asked her to give a working example of innovation in our business and she nailed it. In time I may find it was the wrong decision for me to make but I am an owner manager and can take that risk. A lot of large companies don't let that level of innovation and creativity happen in what they do."

Pete Ward, co-founder of Wayn.com, the popular social media website for travellers, was equally sceptical. He was particularly incensed by what he sees as the lack of engagement by large companies like 3M with start-up ventures where ideas and innovation are bubbling away. "There is a massive gap. They think they are engaged but they are not. And there's an opportunity to make that gap smaller," said Ward.

But how to bridge this divide? The onus sits with the large groups. They have the resources to engage with start-ups and the scale to profit from taking ideas, accelerating their development and selling them into a global market. Small, entrepreneurial firms experiment with new ways of working all the time. Large firms just need to pay more attention.

Initiatives are taking place. Only last week, US group Mentor Graphics set up a European Microelectronics Academy with the UK innovation agency Nesta, specifically designed to match start-ups to larger market players so the new entrants can use the hi-tech manufacturing facilities to test their new designs in silicon, which would otherwise be prohibitively expensive.

But much more can be done. "Yes, we can" may have been the chant from the aspiring innovators at LBS last week, but most have a long way to go before they translate that belief into meaningful action.